XX
Behind the Reform Facade

Cooperation's Price Tag

THE NATIONALISTS AT TAIPEI need no reminder that one of the
best-loved American saints is Santa Claus; but the Formosans think
he may be something of a fraud.

The military policy change in June, 1950, brought with it a
major adjustment of economic support programs. In a sense the
Americans took over where the Japanese had left off, but there was
an immense amount of work to be done to recover the losses which
had been sustained in the tragic five-year interval. It should not
be forgotten that fifty years of Japanese investment - an
investment of administrative skills as well as money - had prepared
the foundations for the Sino-American achievement. This is
sometimes overlooked in the propaganda designed to put "Free China"
before the world as a shining example of successful "international"
cooperation.

From 1950 onward there was an outpouring of printed matter
describing and praising projects undertaken with American
initiative and paid for with American funds. Books, brochures,
pamphlets and mimeographed throw-aways were usually paid for with
program funds and were designed to keep the Congressional
appropriations pump well primed.

The Rankin memoirs offer a summary of aid programs which came
under the Embassy's general supervision. The so-called Conlon
Report prepared for the Senate Foreign Relations Committee in
1959 provides a more detailed analysis.

When Mr. Rankin reached Formosa in August, 1950, there were
fewer than three hundred Americans on the island and the available
program funds were a mere $20,000,000. In 1952 a total Of
$300,000,000 became available and by then Parkinson's Law had begun
to work. When Mr. Rankin prepared to leave Formosa in 1957 there
were about 10,000 Americans present in an official capacity. There
were other hundreds engaged in private enterprise. Commodore
Perry's old dream of a Sino-American administration of the Formosan
economy, outlined in 1853, seemed about to be realized.

The Ambassador estimates that the total American investment in
military and economic aid for the period 1950-1957 had reached two
billion American dollars. The Conlon Report notes that in terms of
per capita investment Formosa received much greater aid than any
other country served by an American program anywhere in the world.
For the Nationalists these were indeed the Seven Fat Years.

With such an enormous investment in such a small area it is not
surprising that the total agrarian and industrial output rose
rapidly. Statistics presented to visiting Congressmen were usually
set forth to show percentage increases after 1949. Few
opportunities were seized to note that production levels in the
period 1945-1949 had dropped far below prewar Japanese production
levels and in some instances had sunk to the production levels of
1895. Nor were VIP's often reminded that as total production moved
back to prewar levels and then gradually surpassed them, the total
population on Formosa had nearly doubled since the surrender. By
1959 it was moving beyond ten million with a growth rate Of 3-5 per
cent annually. Not much was said of the fact that mainland
refugees, members of the armed forces, the government and the Party
were nonproducers. All had to be supported by the Formosan
farmer.

There was never much left at home when the tax-collector had
taken his share.

Formosan friends who wrote to me at this time expressed deep
appreciation of American effort to improve economic conditions but
pointed out that the net result was to strengthen the hold which
the refugees had upon the economy. The greater part of Formosa's
industrial establishment had passed into mainland Chinese hands
thanks to the postwar confiscation policies. Every American dollar
used to subsidize the major industries became a contribution to the
unnamed Chinese investors, shadowy figures in the background. The
Formosans believed that chief among them was T. V. Soong and other
members and associates of the "royal family."

There was undoubtedly a continuity of management of the national
and local finance dating back to 1927. During the exodus Of
1949-1950 Kung and Soong had left China for the United States and
official retirement, but the men who assumed direction of economic
affairs on Formosa had been their close associates for many years.
O.K. Yui, a graduate of St. John's University at Shanghai, had been
variously Managing Director of the Central Trust, Vice Minister and
Minister of Finance in the National Government, Managing Director
of the Bank of China and deeply involved with other large banking
interests, all dominated by Kung and Soong. On Formosa Yui
succeeded Yen Chia-kan at the Bank of Taiwan, then became Governor
and at last Premier or President of the Executive Yuan. Yen, too,
had become Minister of Finance, then Governor, and (succeeding Yui)
Premier of the National Government. It was a game of musical chairs
in which the Formosans were not invited to take part.

These were the men who continued to handle American aid to
Formosa after 1950 as they had handled it in wartime China, working
now very closely with the large American Aid mission.

Formosans agree that under Governor Wu there was a great
improvement in the administration of law and of economic affairs.
Foreign observers agree that graft, corruption and the grosser
forms of nepotism were significantly reduced. It was standard
practice, however, for mainland Chinese to imply to foreign
visitors that Formosans were a rather backward or provincial lot,
and that Formosa's technological development was for the most part
a Chinese achievement since 1945. Under the circumstances members
of the aid missions readily adopted the official line; aid
propaganda brochures asserted that the United States was providing
"Fuel for the Good Dragon" and mission members talked of their work
in terms of the big push back to the mainland. Aid to the native
Formosans was a side issue and they knew it.

On the mainland an abusive traditional Chinese landlord system
had long been recognized as a prime source of peasant discontent.
The Nationalists had talked of reform but for years had done
nothing on a significant scale. The Communists exploited these
unfulfilled promises to woo support among the landless peasants.
Very late - after World War II - American advisors in China had
persuaded the Nationalist Government to organize a Sino-American
Joint Commission on Rural Reconstruction. It made little headway on
the mainland, for its reform program disturbed too many great
landholders who were influential members of the Nationalist Party,
Army and Government. They would not tolerate change. The JCRR, as
it was called, was transferred to Formosa during the great
retreat.

In Formosa it could surge ahead with its land redistribution
plans. The Formosan landholders were fair game; no one in the
Government or Party hierarchy was hurt by land reform except
perhaps those who had acquired extensive property under the Chen Yi
and Wei administrations.

American aid-program literature gives exceptional prominence to
two measures sponsored by the JCRR. The Land Rental Reduction
Program which was written into law on May 25, 1951, said that
henceforth the tenant-farmer shall not pay more than 37.5 per cent
of his crop or crop-value as rental on his leasehold. The American
literature calls this a magnificent achievement and a generous
reform, but it usually implies that the Formosan tenant-farmer had
suffered exorbitant rent-rates before the Chinese came in to
liberalize the system. In point of fact the Japanese had
established rent controls and land-courts before the war. The
exorbitant rents being so handsomely reduced in 1951 had been
exacted from the Formosan peasant after the Chinese took control in
1945.

The second great achievement, according to aid-program
literature, was the so-called Land-to-the-Tiller program set in
motion in 1953. Every farmer who held more than three hectares of
middle-grade paddy field (about 7.5 acres) or six hectares of dry
field was compelled to sell his surplus land to the Government. He
was paid 70 per cent of the price in "land bonds" and 30 per cent
in stock in govemment-owned industries - principally industries
which had been confiscated in 1945.

Thousands of Formosans were grateful for the opportunity to
become landowners or to add a little to their small holdings, even
though they found it difficult to obtain chemical fertilizers and
had very little rice left when the tax-collector was finished with
them. But for thousands of Formosans the Land-to-the-Tiller program
brought a sharp reduction in their modest standards of living. Many
suspect that the program was designed as much to destroy the base
of the emergent middle class (the class which produced the leaders
of 1947) as it was to aid the landless peasant.

Few Formosans - very few - had great landholdings before 1945,
but there were many who had enough income to support them in
comfort at home, to invest in small shops or businesses in the
towns, and to send bright sons and daughters on to higher schools
and to the universities in Japan. Now they were forced to accept
bonds and stocks which taken together could not produce income
equal to the income lost when private land was taken up by the
Government. Furthermore, they were well aware that govemment-owned
industries were generating salaries and dividends for the
privileged managerial staff who were predominantly Chinese. From
one of my former students came a letter touching on the subject and
dated August 28, 1953.

... Taiwan has changed very much since [1945]. 90% of
Taiwanese become poor and poor. I've lost all my fields during
these years ... the Government took up and sold them to "tillers."
We can't pay daily expenses with salary, which is less than $50 a
month. Thus we can't educate our children.

There are two ways; one is to go abroad and don't go back to
Formosa, the other is to get a job in American office, as Mr. ___
did. As for me, I don't want [to stay] in Formosa where there is no
freedom, no hope. [1]

I am inclined to accept this at face value, for in a letter to
Assistant Secretary of State Dean, Rusk Ambassador Rankin reported
that "due to rapid population growth and to the much more rigorous
collection of taxes from the largely agricultural population" some
American experts in the Aid Mission were convinced that "the
average inhabitant of this island is worse off economically than he
was a year or two ago . . . "

Dumping the Liberals

While the tax-collector's rice sacks were being filled so
bountifully what was happening elsewhere in General MacArthur's
contented democracy, where representative government prevailed, the
courts were in good order and the standard of living so high?

The appointment of Dr. K. C. Wu to the governorship in the last
days of 1949 had been a desperate but successful effort to restore
American confidence and to ensure a continuing flow of American
aid. Dr. Wu had moved promptly, boldly and with vigor to institute
political as well as economic reforms. At the top of the list was
his program to grant some measure of political expression to the
Formosan people. He must gain the confidence of the native
islanders. The Nationalist refugees would need Formosan help if the
Chinese Communists one day moved against the island in force.

Wu's liberal views were well known. He was never a great
favorite with the Generalissimo, and between the Governor and the
Heir Apparent there was a wall of mutual dislike and mistrust. Now
Wu, with great courage, dared to tell the Generalissimo of his
son's extreme unpopularity. Ching-kuo had instituted a reign of
fear throughout the island, using the secret services, the police
and the political commissars in a ruthless attempt to secure
absolute submission to Party, Army and Government. The Governor
warned the Generalissimo that the Formosan majority were being
estranged to a dangerous degree.*

General Chiang Ching-kuo on his part believed Wu was making
dangerous concessions and that liberal gestures were no longer
needed. Now that the Republicans had come to power in Washington
(in January, 1953) American aid was assured; Wu had served his
purpose. But more than that Ching-kuo had lost face before his
father the Generalissimo. No liberal civilian could embarrass
General Chiang Ching-kuo with impunity. Wu must go.

On April 3, 1953, the Governor narrowly escaped assassination.
On April 10 he was dismissed but was given permission to leave
Formosa. There was a second attempt on his life. It is said that
when Madame Chiang learned of a plot to waylay Wu en route to the
airport she intervened with the Generalissimo, pointing out what
serious repercussions this would have in America.

Dr. and Mrs. Wu were required to leave their young son a hostage
at Taipei. The former Governor retired to Evanston, Illinois, and
there kept silent for thirteen months. At last influential
Americans persuade the Generalissimo to permit the boy to apply for
a passport and to leave Formosa.

When the lad was safely away Wu spoke out. In a series of "open
letters" to the National Assembly at Taipei he sought to alert the
Assembly to the need for genuine reform if "Free China" were to
survive. He noted Chiang Ching-kuo's dangerous ambition to succeed
his father despite constitutional provision for succession to the
Presidency of China. His letters reviewed Ching-kuo's "political
commissar" system which was undermining the morale of the Army, a
system which he and his father had borrowed from Red Russia. He
reviewed Ching-kuo's abuse of police authority and his campaign to
generate fear everywhere as a means to secure absolute obedience.
He noted that neither the Formosans nor the mainland Chinese
refugees had guarantee of individual rights, freedom of assembly
and publication or the right of free speech. It was a powerful
indictment.

The former Governor asked the National Assembly to publish his
six-point analysis of the Taipei dictatorship. Chiang quite
naturally suppressed it and accused Wu--rather belatedly of
"dereliction of duty," "corruption in office" and "treason."

From Evanston Wu replied that he would be glad to stand trial in
an American or an international court but never in a court set up
by Chiang. He then addressed a new series of questions to the
National Assembly and the Generalissimo, each designed to illumine
an aspect of the Gestapo organization which ensures proper public
attitudes in "Free China."

In an attempt to rouse Americans to some recognition of
conditions on Formosa the former Governor published a vigorous
account of his experiences with Ching-kuo and in passing called
Peng Meng-chi Chiang's "hatchet-man." The article entitled "Your
Money is Building a Police State in Taiwan" appeared in Look
Magazine on June 29, 1954. But this was the McCarthy Era and
the period of growing crisis concerning the offshore islands
where--if Mr. Dulles were to be believed--Chiang Kai-shek was nobly
defending American democracy. Wu's voice was drowned in the clamor
for more aid for Chiang.

K. C. Wu's fate served warning that Chiang Ching-kuo would brook
no opposition in high places. With the liberal Governor disposed of
Chiang's security officers turned their attention to a liberal
General who had been given prominence in the "reform" period,
General Sun Li-jen, Commander-in-Chief of the Chinese Army.

American correspondents had heard Formosans say that Wu and Sun
were two mainland Chinese leaders they felt they could trust to
give Formosans a "fair deal." This praise had been dutifully
reported in the American press. From there it went back to Taipei
by way of the clipping services.

Sun freely expressed his belief that Formosan youths made good
recruits and took pains to ensure fair treatment for them in the
ranks. He, too, realized that one day the refugee Nationalists
might need Formosan loyalty. He was also known to believe that
Taipei should look first to the defenses of Formosa and should
perfect them before venturing overseas to "retake" the continent.
It was well known that among foreigners General Sun was the most
popular Nationalist officer, that members of the American military
mission considered him the finest professional in the Chinese Army
and that he enjoyed Washington's full confidence.

Added up, these presented to Chiang Ching-kuo's eyes a most
formidable challenge. Ching-kuo is not a regular Army man, a
product of the Chinese military academies, but an interloper in the
military establishment, raised to favor by his father. Even in 1955
he was holding key positions, however, and could ruin any officer
and any member of the Government. He was master of the secret
services, controlled the Youth Corps and the Veterans' League and
was Director of the Political Department in the Army with
commissars or spies in every subdivision of the military
organization. From Ching-kuo's point of view if General Sun enjoyed
American support and had the loyalty of the Formosan conscripts he
was a dangerous man.

Sun made the mistake Wu had made. He found occasion to protest
--politely, of course--that Ching-kuo's political commissars
seriously interfered with regular Army operations, morale and
discipline.

In midyear 1955 the Generalissimo had occasion to stage an
elaborate military review in honor of General Maxwell D. Taylor,
USA. The American Ambassador was present. Several reckless and
dissatisfied young officers seized this opportunity suddenly to
push forward with a petition in which they set out grievances.
Chiang was furious. On the spot General Sun was relieved of his
command, held responsible, and placed under restraint. Then
followed an inquiry conducted chiefly by Chiang Ching-kuo's agents.
General Sun soon found himself charged with "harboring Communists"
in his vast military organization.

He was placed on trial knowing full well that whatever the
"evidence" was it could be twisted readily enough and could lead to
the firing squad. The court-martial, however, found him not guilty
of Communist association or conspiracy but of "culpable
negligence." None of Sun's American colleagues would have accepted
a "red conspiracy" charge at face value hence he could not be done
away with out-of-hand. It was certainly not wise to let him leave
Formosa as Wu had done. He was sent off, under Chiang Ching-kuo's
surveillance, to retirement at a small house far from the capital,
where Ambassador Rankin observed him "tending roses."

A bit of truth was visible through the curtain of words
surrounding the trial for the indictment had included not only
charges of "culpable negligence" and "harboring Communists" but
also an allegation that Sun had "built up a personal clique" for
his own advancement.

To discourage any demonstrations of sympathy some three hundred
of Sun's officers were arrested in the case - quite enough to chill
any desire in the Army to speak out or act thereafter in Sun's
favor. The Generalissimo chose Ching-kuo's trusted associate
General Peng Meng-chi to take Sun's place as
Commander-in-Chief.

A Case for Mr. Dulles

After attending a meeting of the Committee on Foreign Relations
one day Senator William Fulbright rose in the Senate Chamber to
declare with some heat that "What we want and what we will support
is the truth. What we want and what we will support is a Secretary
of State who will not treat us as children ready to clap in delight
at every fairy story, however fanciful."

He was speaking of Mr. Dulles and his views were shared in many
capitals around the world. From the public record it is indeed
difficult to know which story-of-the-moment to accept when we
search for his basic policies toward Formosa.

No American leader was more outspoken in his condemnation of
Peking and all its works and none could surpass Mr. Dulles in
lauding the high moral purpose, dedicated leadership, and world
importance of Chiang Kai-shek and his associates at Taipei. His
record for "brinkmansbip" needs no comment here; who could doubt
then that Mr. Dulles considered the Nationalists to be America's
most important allies? The Secretary was not one to walk
softly.

As we sift through the record, however, we see that Mr. Dulles
in truth thoroughly undermined Chiang's legal position on Formosa
and skillfully blocked his plans for a large-scale continental
venture. While talking non- recognition of Communist China it was
he who flew to Europe to confer with China's Foreign Minister Chou
En-lai. It was Mr. Dulles who arranged the ambassadorial meetings
in Europe through which Peking and Washington continue to keep in
touch and at which the Formosa problem can be discussed.

The conferences between ambassadors from Washington and Peking
take place behind closed doors far from Taipei. The Nationalists
resent them, wondering if their claims upon China proper and
Formosa are being discussed or compromised in any way. Formosan
independence leaders in exile likewise mistrust these meetings and
wonder if Washington seeks a formula through which (after Chiang's
death) the island may be "negotiated" into a state of neutrality
and from a state of neutrality in due course be transferred to
Peking, thus restoring "the territorial integrity of China."

It will be recalled that the State Department held unwaveringly
to the view that China's territorial integrity must be respected
and that Formosa must be restored promptly by treaty signatures.
This was the official position on April 8, 1950, when Mr. Truman
invited Mr. Dulles to become Foreign Policy Advisor to the
Secretary of State. Then came the June crisis - the Korean affair -
and the President's statement that "the determination of the future
status of Formosa must wait the restoration of security in the
Pacific, a peace settlement with Japan, or consideration by the
United Nations." On September 8 Mr. Dulles was directed to
negotiate the Peace Treaty. He had therefore to steer a diplomatic
course through very choppy waters. It was an extraordinary
performance, for henceforth his fervent public statements and his
"brinkmanship" seemed entirely to support Chiang's territorial
claims, but his official acts and hidden negotiations had quite a
different purpose.

He soon found a formula which enabled him to circumvent or
cancel out that unfortunate "territorial integrity" commitment. He
first proposed that Japan should merely relinquish sovereignty
there, after which the island's permanent status would be
determined by the United States, the United Kingdom, Soviet Russia
and China acting together on behalf of nations signing the Treaty.
If these four Powers could not agree within one year the question
should then be taken into the UN Assembly.

The Generalissimo would never accede to this and Communist China
was not a member of the UN nor among the nations summoned to San
Francisco. In midyear 1951 Mr. Dulles let it be known that the
Nationalists, too, were not invited and would not sign the Treaty.
Thus at San Franciso, Japan was divested of her sovereign rights in
Formosa. Title was surrendered to the forty-eight nations who
signed the Treaty, to be held in trust by them until the final
issue can be settled in the UN Assembly at some future time. The
Treaty came into effect in 1952 and there the matter stands.

Taipei announced that it would not consider itself bound by any
provisions affecting its interests. As for feeling bound by
President Truman's earlier embargo on provocative crosschannel
military action Chiang had long since displayed indifference.
Ambassador Rankin notes that there were frequent hit-and-run forays
to the China coast; Americans at Taipei conveniently looked the
other way.

Upon entering office in 1953 President Eisenhower promptly
fulfilled Republican campaign promises to lift the ban. It was well
known, however, that he too wanted to minimize the dangers of a
full-scale war along the China coast. Perhaps he thought Chiang's
military advisors could control the situation by controlling
military supply.

Chiang (and not a few of his American friends) had other ideas.
He was determined to provoke an open conflict between the United
States and Communist China. No other conclusion can be drawn from
the pattern of subsequent events. Throughout 1953 the number of
cross-channel raids increased in number. The Nationalist Air Force
extended the range of attack to reach inland cities and industrial
targets. Significantly there were no visible efforts to "go it
alone."

Soon the world's attention was fastened on Quemoy and the Matsu
base - the offshore islands. As Chiang built up his installations
on Quemoy with an immense amount of publicity the Chinese
Communists developed highways and railways leading into the coastal
area and began a build-up there to block any Nationalist attempt to
cross the Quemoy water barrier in force.

But still Washington would not agree to support offensive action
on a large scale. The Nationalist propaganda campaign within the
United States was being pushed to an extreme and was generating an
extraordinary pressure upon the Eisenhower Administration. At
midyear 1954 Chiang attempted to tip the scales by a move of
extraordinary boldness. Nationalist naval units with air support
captured a Polish freighter and a Russian tanker in waters near
Formosa. This was not a hit-and-run strike against Communist
fishing craft along the coast but an act of piracy on the high
seas. This was brinkmanship of a new order.

At what point here would Moscow's obligations to Peking
overweigh Washington's commitments to Taipei?

President Eisenhower looked at his military maps with a
professional eye and decided that the risks were becoming too
great. On September 9 Mr. Dulles flew into Taipei for a five hour
talk with the Generalissimo. He flew away again solemnly announcing
that "China does not stand alone."

On December 2, at Washington, the Sino-American Defense Treaty
was signed. In this new document the Nationalists promised to leap
to the defense of the United States if it were attacked by a third
party and the United States promised to defend Formosa and the
Pescadores. It was reserved to the President of the United States
to decide if the offshore islands meaning Quemoy and the Matsus -
were to be defended with American help.

Chiang seemed to have agreed that the head of a foreign state
could make decisions vital to Free China's welfare. Mr. Dulles on
his part had shrewdly moved to sharpen the line of demarcation in
the Straits.

The Generalissimo was not to be thwarted; to maintain his regime
intact at Taipei he had to prove that he was on the offensive and
that return to the homeland was imminent.

Violating the spirit and the intent of the new Treaty before it
had been confirmed by the Congress, he stepped up offensive action
far to the north in the Tachen islands lying between Formosa and
the Yangtze River estuary.

This renewed and heightened the sense of crisis and the dangers
of "brinkmanship" in early 1955. Under instructions from Washington
Chiang's American advisors informed him that American naval units
would help him withdraw from the Tachens but would not support him
there in offensive action. Most reluctantly he ordered the
evacuation of Nationalist forces and with them, willy-nilly,
brought off some 14,000 Tachen villagers who had no interest
whatsoever in being "liberate" in this manner. To them Formosa was
foreign territory but they had no choice.

On March 3 the busy Secretary of State again appeared at Taipei
to repeat and impress upon the Generalissimo the President's desire
to reduce dangerous tensions in the area. For publie reassurance
there were formal statements and clouds of rhetoric concerning
partnership in defense of Free China and the Free World. The
Nationalists were assured again that if Washington deemed an attack
on Quemoy or the Matsus a direct threat to Formosa or the
Pescadores then all restraints upon Nationalist action would be
lifted.

Mr. Dulles needed that clear-cut territorial definition if he
were to bargain with Peking. He let it be known by indirection that
Communist China might have the offshore islands if it would not
attempt to take them by force.

Thereafter there continued to be a great many verbal
pyrotechnics and not a little smoke and fire concerning Quemoy. But
has Peking at any time been serious there? Certainly the Communists
would resist any Nationalist attempt to advance beyond the water
barriers, but otherwise the situation worked well to Peking's
advantage. If the Communists succeeded in taking Quemoy they would
be faced with the need to make good promises to take Formosa as
well and that endeavor would certainly mean the quick destruction
of Chinese cities and industrial concentrations everywhere in
China. They gave some indication of their contempt for Chiang's
position when they instituted the ridiculous
Monday-Wednesday-Friday bombardment schedule at Quemoy as if daring
Chiang to waste his resources on Tuesdays, Thurdays and
Saturdays.

Meanwhile the Nationalists used Quemoy as a major propaganda
resource. An enterprising Formosan once counted the published
records of more than two thousand foreign visitors flown over from
Taipei within a short space of time to see how seriously Chiang is
determined to "retake" the continent. At Tokyo Formosans speak of
the offshore islands as "Chiang's Quemoy-Matsu National Park." Mr.
Dulles was photographed there, looking grimly impressed.

Formosan leaders in exile watched all of this with close
attention. They appreciated Dulles's efforts to sever the links
with the mainland but they were baffled by fulsome praise of
Chiang's moral leadership in the Free World and of Formosa as a
symbol shining before all freedom-loving peoples. They were aware
of Mr. Dulles's occasional hints that UN action and a plebiscite
might provide solution for the Formosa problem; none knew what form
the plebiscite might take nor what choices might be placed before
the Formosan people.

Getting at the Facts: The Conlon Report

As Formosa's "Republican Decade" drew to a close the Senate
Committee on Foreign Relations at Washington determined to probe
the realities of the American position in Asia if this could be
done. A team of specialists was asked to bring in a report on the
facts and an analysis of the problems.**

On November 1, 1959, the Senate Committee published the
Conlon Report. [2] This dispassionate and orderly
presentation provided a fresh breeze to disperse the clouds of
diplomatic and military rhetoric through which the Foreign
Relations Committee had been so long groping its way. The basic
issues could never be quite so confused again.

The emergence of a strong Communist China was recognized by the
reporting specialists. Peking was rapidly establishing its claim to
be a world power. It could no longer be described in Chiang's terms
as a temporary accession of "bandits." To the population of 660
millions there must be added each year millions more. A highly
developed organization of economic manpower and natural resources
was backing up an army in excess of 2,500,000 men.

Against this formidable power unit the United States had been
persuaded to pit Formosa with a deeply divided population and an
army far too small to make headway on the mainland, but much too
large for the island economy to support. Formosa, to keep afloat,
was wholly dependent upon heavy American subsidies.

The Conlon Report noted the unrealistic military
ambitions of the dominant minority, and the gap between this
minority and the Formosan natives. It warned of Communist appeals
to homesick mainland Chinese, urging them to come home where -
Peking said -"all will be forgiven."

On the other hand, the Formosans want to stay on Formosa and for
them to talk of "return to the mainland" is meaningless. Among the
Formosans communism has little appeal; the local ideal is autonomy
or independence under a guaranteed neutrality.

The Report examines and deflates the argument that
Formosa as "Free China," has appeal for overseas Chinese living in
other parts of Asia; it is scarcely a "rallying-point for
freedomloving Chinese." It warned of the danger attending American
insistence that Chiang's government is the "Government of China"
and that Taipei alone can be recognized in the United Nations.

In presenting policy alternatives the authors suggested that the
United States should cancel commitments involving the offshore
islands and should see to it that the Nationalists withdraw.
Disengagement there and a clear line of demarcation in the Straits
are essential if policies are to be realistic and practical.

It was observed that if Formosa could be held neutral for a
sufficient period the mainland refugees would be absorbed by the
island people. On the other hand the Report warned that a
serious crisis at some unexpected point might call for swift
decisions at Washington. The succession problem is a major danger
point.

An oblique reference to Chiang Ching-kuo and his clique was made
in these words:

In the event of a bargain between some political leaders on
Taiwan and the communists, to be sure, the United States might be
placed in an extremely awkward position whereby it would have to
decide hastily whether it should intervene in an attempt to protect
the Taiwanese right of self-determination. [3]

The Conlon Report proposed a Republic of Taiwan under
an American guarantee of its defense and of assistance to all
mainland refugees who would wish to return to China proper or go
elsewhere overseas. To propose the transfer of Formosa to Communist
China in seeking a general settlement in Asia without the consent
of the people on Formosa would be an "immoral act" and would
seriously undermine American relations with all smaller countries
who look to the United States for aid in maintaining
independence.

The Taiwanese people themselves have given considerable
indication of wishing to remain separate from the mainland and
could be tested by plebiscite if this were agreed.

* Texts of Wu's later communications to the
Generalissimo and to the National Assembly on this subject are to
be found in Appendix II, pp. 480-486.[Back to the text]

** The Conlon Associates group produced the
study under the title U.S. Policy Asia. Three University of
California specialists were the principal team members. Professor
Richard Park prepared the section on South Asia, Professor Guy
Pauker wrote the section on Southeast Asia and Professor Robert A.
Scalapino prepared the section on Northeast Asia, with subsections
on "Communist China and Taiwan."[Back to the text]

Notes

1. Letter to Kerr, dated at Taipei, August 28,
1953.

2. [U. S. Govt. I Congressional Record -
Proceedings and Debates of the 86th Cong., 2nd Sess. (Extract
reprint, 1960) "Conlon Associates Report on Communist China and
Taiwan. Extension of Remarks of Hon. Charles 0. Porter of Oregon,
in the House of Representatives, Tuesday, January 19, 1960."